What is a Bull and Bear Market?

A bull market is a period when stock prices are rising. A bear market is a period when they are falling. These two terms come up constantly in financial news, and understanding them helps you make sense of what is happening around you without getting swept up in the emotion of the moment.

What counts as a bull or bear market?

The conventional definition of a bear market is a decline of 20% or more from a recent peak. A bull market is typically defined as a rise of 20% or more from a recent low. These are not official rules they are widely used conventions that give investors a shared language.

How long do they last?

Bull markets tend to last longer than bear markets. Historically the average bull market has lasted several years. Bear markets tend to be shorter and sharper. They are painful while they happen, but they have always eventually given way to a new bull market.

How should you behave in each?

In a bull market the temptation is to take on more risk than you should, assuming prices will keep rising. In a bear market the temptation is to sell everything and wait for things to improve. Both instincts tend to hurt long-term investors. The most reliable approach is to stay invested through both and keep contributing steadily.

Why does it matter?

Knowing whether you are in a bull or bear market gives you context. It helps you understand why your portfolio is moving the way it is and whether what you are experiencing is normal. Markets have always cycled between periods of growth and decline. That has not changed and is unlikely to.